A short look at long-term care insurance

As we so often hear, people are living longer and longer lives, and able to survive illnesses that would have been fatal not long ago. However, living longer than expected, even while remaining healthy, can be a strain on retirement savings, and an illness or chronic condition that requires extended care will quickly deplete those savings.

If you are willing to put some current savings dollars toward insurance premiums, long-term care insurance can make your retirement more secure, no matter what health challenges you may face.

What is it?

Long term care insurance pays a benefit towards the costs of home care or facility care when you need it. Once the qualifying conditions are met, the long term care benefit is paid out over time, up to the policy limits, daily, weekly or monthly. Every carrier’s policies are slightly different, so look for one that best suit your needs and budget.

Home and facility care can stand alone or can be combined. A plan with both home and facility coverage can take you through different stages as your care needs may change over time. You can choose the length of the benefit period, either to be paid for a certain number of years, your lifetime, or in some cases up to a maximum benefit dollar amount.

Premiums can be paid for the length of the policy until a claim is made, or for a set number of years so that the policy can be completely paid up long before you need the care. Premiums can be kept lower by opting for longer waiting periods or choosing a shorter a benefit period. And as with all insurance, the younger and healthier you are when you apply, the lower your premiums will be.

No one can know exactly the amount of care they may need, or for how long, and claims may be decades away. To offset some potential “what ifs….” additional policy riders are available. Riders can be added to ensure the benefits rise with inflation or to return eligible premiums if you die before making a claim. Some insurance carriers provide shared coverage, where there is a maximum benefit available to a couple, so a greater portion of the benefit can go to one person if he or she needs it.

Who is it for?

The short answer is everyone. Long term care insurance may be particularly helpful for individuals who have little or no pension or guaranteed income in place for their retirement years. It can provide stability to offset retirement savings and may enable you to preserve your savings or keep assets including your home.

If you know that you will be faced with providing care for parents, grandparents or another family member in the future, a long term care policy is a step to secure their future care without jeopardizing your future finances. Paying, or sharing in the payment of a policy with siblings or the insured makes paying for care a small predictable expense now compared to a larger, more difficult expense later.